is now defined this policy is prudent. recent liquidity injections. the governor says china still has the scope to act if the economy needs a boost.

sharp shares plunged after foxconn put the brakes on its proposed takeover. just hours after sharp accepted the bid. new material information. the deal would give the company two thirds ofost sharp. those the headlines on bloomberg news. let's take a look at the markets for you. they are closed for lunch. asian stocks jumping. ♪

mistakes keep getting higher for the battle on encryption. how to unlock an iphone. controlling anti-refugee posts. whose job is it to police the internet? it's got whose in the spotlight as suitors swirl. this is not a case about one isolated iphone. the government seeking a dangerous power, the ability to force companies like apple to undermine the basic security and privacy of hundreds of millions of individuals.

tim: very powerful language travel. accusing the fbi of trying to hijack the national debate on privacy. the head of the fbi telling members of congress that this was not an issue where they were trying to send a broad message rather this was dealing with one individual issue of trying to get into this iphone. perhaps they would send a broader issue. it is about this phone and the need to get in for this case. we also saw microsoft talking

about how they are going to support apple. one of their executives bringing out a near 100-year-old adding machine to illustrate the statute that the fbi was trying to use his from that. . corey: we're going to dig in deeper into this later on. thank you very much. let's look at the legal arguments. james comey: this isn't us going and opening people's phones. going to a constitutional court and asking for permission under the fourth amendment to do something area it would be a precedence that a

court would look to deceive it was useful. the entire framework is under our rule of law. corey: apple rejected that argument. the government knows those statements are not true indeed the government has filed other applications for similar orders that are pending other courts. during ms. that fighting terrorism. what you make of apple's argument? >> apple had quite good response right now. they are saying to take two to four weeks.

to write this code to the fbi wants. they're saying this infringes on their first amendment rights. they have a strong case. the justice department didn't think this battle. this is some it was engaged in active terrorism. corey: this notion of code is free speech. paul: a lot of code functions as speech. shared between people as much as it is executed on the computer.

almost like you're talking to other programmers and the computer. corey: it performs a function that expresses something. richard: we see the privacy all the time. we find ourselves in a situation where privacy has to be given back and we do with search warrants and we allow agencies to go inside of homes. tank accounts.

if they have shown enough proof that there is a risk here. this is analogous to a crime uppening and they just clean the mess and there is no police tape. paul: the cases that the fbi is relying on our very outdated. the tech community has said that we are going to provide a device they would not be a way for law-enforcement even with a legal authorization. time relying on infrastructure hacking into people's devices. engaged in terrorism, engaged in crime. they don't have the ability to

gain access. corey: does the government need this information to fight terrorism? paul: it does need away into this type of information. these companies are at the core of how we communicate today. they've been talking about setting up a blue ribbon commission on this. it may get to the supreme court before congress acts. privacy sacrosanct as part of our society?

paul: if you give them an inch they're going to take a mile. other phones are going to get unlocked. people are digging in for a long fight. it is possible to create very difficult to crack encryption that people can use other phones. that will take months or years to resolve. richard: historically one of the

is thein the backdrop nsa edward snowden scandal. you will a standard that had to be met. what we found with the nsa was that things got out of hand. that was behind closed doors not in the courts. it has been a few years now. we are not ready to give you a second set of keys yet. corey: thank you very much.

more when bloomberg west returns. ♪

corey: this get back to the main story on encryption. apple is saying the u.s. government has overstepped its authority.

dan: i think apple can do it. for all the reasons you guys discussed. this soerally built that others can't do it so it is even that easy for them. i think i think have an obligation to fight for privacy. let the courts decide. brian: yes they can do it. it would take them to the four weeks. once that is out there,

everybody knows there is a way around the encryption. current models you would be able to do this on. dan: you have an obligation as the ceo of a public company. imagine you are going to allow the united states government to get into this. the chinese government wants this. you don't get to say only america gets it. get to make that choice for hundreds of millions of users that had no expectation that government would get at this data.

they have a responsibility to do exactly what they're doing. debate at least. brian: the tech companies have

learned we don't want to be complying with the government because they want to shine a light on what they're doing. their position does become untenable. if there was a bigger terrorist event or if more and more crime was committed on these phones. it will go to this commission. it can't be all or nothing. maybe we let the courts decide or the tech community stands firm. dan: if you are dealing company otheras to do this

companies would be saying don't buy apple by us if you want your privacy protected. i think tim is handling this the right way. if you feel like the company you buy from rolls over and gives the government everything wants. originally 75% of people said apple should do it. now the percentages lower. this is not an urgent matter of lives that you can save right now. in the united states could be very harmful.

brian: if there was a bigger events, comparable to 9/11, would public opinion go the other way? corey: is it facebook's job to police online racism? check us out on the radio. more after this. ♪

high level talks between google and the european union. meeting face-to-face with the competition commissioner. the eu is in final stages of the investigation of google. google is fighting back by highlighting its contribution to the european economy. mark zuckerberg and angela merkel in berlin.

countering racist posts targeting refugees. it's an interesting role for zuckerberg. sarah: they can't do much about it. they are trying to be a bastion of free speech. there are millions of posts coming on every single day. which ones make people feel uncomfortable. we have to use crowd sourced responses from our users.

if you try to post something i a copyright issue with it. they really try to tear on the side of only doing that when it is totally illegal. they're want there to be as few barriers as possible. they rely on it after the fact.

facebook also siding with apple in its case over free speech. it will have a brief submitted next week. corey: thank you sarah. coming up, the mega-fight between apple and the fbi.

pressure continues to mount on yahoo! can they placate investors? ♪

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business.

sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. the goldman sachs president says he hopes china will improve communication. financial markets try to understand the tools that china is using to stimulate the economy.

a more globaln approach to monetary policy. >> the chinese are in a tough position. the world right now is looking at what are the stimulative measures, what is china prepared to do it growth slows down. ,e're looking at mario draghi what is the federal reserve going to do in the united states? the singapore stock exchange may be expanding into shipping. discussions are at a preliminary stage. a nonbinding bid for the shipping board. in talks with others including the london metal exchange.

♪ let's look at how the markets have been trading in the asia-pacific region. they are set for a second weekly game. shanghai stabilizing. highsn from some of the after we heard from the pboc governors. this is the new normal. after plunging 6% we have seen a steady in the end and steady oil prices. the nikkei is up about 1%.

♪ cory: to turn to our top story, apple laying out its arguments against the fbi's request to unlock one of the iphones of one of the san bernardino terrorists. we seen fbi -- we have seen fbi director james comey testified. what happens next in this battle? >> tomorrow, apple's annual shareholder meeting. we will be looking from any comments -- for any comments from shareholders in cupertino. next week, we expect apples top lawyer and -- apple's top lawyer and the head of the fbi to be on capitol hill for a hearing. march 3 is the deadline for apple allies to file their briefs of support.

reports of about mid-march, another apple event for their products. they are selling a lot of products. the annual spring event is around this time of year. toward the end of march, we are expecting to have a court hearing on these issues. cory: apple said they were developing a phone that would be impossible to do the things that the government is asking for right now. maybe we will see that in these new products. >> the issue here is that -- silicon valley would make the case that technology is developing and changing at such a rapid pace that it is outpacing where the law is, and that is why there needs to be a national policy discussion, rather than done in the courts.

moving onto yahoo! and the rush to sell its core business. the management team does not seem to have the same sense of urgency as some of the investors. earlier this week, "time" added its -- time, inc., added its name to the list of potential investors. what assets -- we've seen some news about depleting numbers of homepage, mail, the most valuable assets at yahoo!, outside of alibaba cash. what other assets do you think the other companies might want?

> i think each of them might want something different. if they are a private equity firm, they would be interested in how much cash flow it could generate in the next couple of years. i don't know that that's going to be about reinventing out who, as much as it -- reinventing yahoo!, as much as it's going to be about cutting costs and higher margin. each one will have a different perspective. verizon has aol. there are properly lot of synergies -- there are probably a lot of synergies between the two. all of the assets that yahoo! acquired over the last couple years were available for sale. aol could have bought them. they opted not to. i don't really know. if you take them at their word, which is all i have, i think they would consolidate the media site and try to have more content come through the pipe. verizon is trying to have a smart pipe instead of a dumb pipe. that is there articulated reason. comcast doesn't have significant digital asset play. they have extraordinary assets in nbc.

i think everybody will look at it differently. cory: are there enough assets they could sell off to make investors happy, but still have a yahoo! that would be different from the bigger entity? dan: it has been 10 years since i've been there. one of the things i think is misunderstood is, it is not like you can sell off a channel. cory: you can sell sports. you can sell finance. dan: you would have to separated from all of the servers, separate all of the ads. what would you be selling? there were ads that run on yahoo! sports that were not sold on yahoo! sports. what part of the servers would be going? hosting fees and all of those things -- it's not as easy to separate the channels. one of the reasons yahoo! did not sell the channels is they end up shutting them down. it's not like ebay where they could sell off skype or separate out paypal. those were very different businesses, separate units.

yahoo! does not have separate units that way. even when yahoo! said it was going to make cuts, it is talking about selling real estate and things of that nature. i think there is a misunderstanding of what is actually sellable as a separate, independent business unit inside of you who, which -- of yahoo!, which there aren't very many. cory: is there a price at which yahoo! could acquire you as ceo? dan: i am extraordinarily happy right now. cory: that is not the question i ask. you -- asked. you have been asked this question a lot in the past few weeks. dan: they have had feet of activists -- had two activists, multiple ceos, a hostile takeover bid. the company needs to reinvent itself outside of the public light. anything that had one billion users -- we may not be able to articulate why people go to yahoo!, but people do.

if you have those assets, what could you do with them that represents where the industry is going, not where the industry has been? try to trickle down on brand advertising -- trying to trickle down -- to triple down on brand advertising may not be the direction for the future. i think yahoo! could have a very bright future. i think it just needs to be left alone to execute on doing that. for whatever reason, when a small -- for whatever reason, a small market cap company is getting a lot of attention every day. cory: so many of us have worked

there, including you and me. i'm taking that as not a no. it is possible to change a fanbelt whilst the engine runs, but it is hard. that's what you guys are doing. that's what the stock price looks like right now. dan: the company is excited about where it is going, but it is difficult to change the company. yahoo! is going through the difficulties. going from a transition of a traditional business, textbook rental company, to a pure digital business into a high-growth, plus-30% grower, focusing on young peter -- people and education is a wonderful mission for us to be on. the fact that we have actually for millions -- 4 million students -- we are trying to do it in a public light and go through a transition where we say revenues are going down before they go back up. but the actual chegg services, we see the middle range already. four years ago, they did not exist. the future is really bright for chegg.

we went from losing $18 million to $13 million to plus $5 million. we are excited about the future. what it says is on-demand education is a powerful place to be, and almost nobody is focusing on it. going directly to the student, giving them high-quality, low-cost products, where they can get them directly is a very big business. cory: much different business than renting them out. dan: it is easier to rent them then to read them -- than to read them. textbook rentals have changed the publishing industry forever. textbook companies have had to go through bankruptcy. we did not intend to do that to those companies, but it just shows you how powerful it is. we deliver over 6.5 million textbooks per year. our digital services had over one million subscribers. we only have two of them so far. cory: dan rosensweig, always great to see you. coming up next on "bloomberg west," new numbers for electric cars.

sales predicted to soar. could it be enough to tip the scales in terms of the worlds next oil crisis -- world's next oil crisis? shares of baidu are up. making investments beyond search and advertising. those efforts are beginning to bear some fruit. more "bloomberg west" next. ♪

cory: tesla. a legal fight involving general motors and indiana.

lawmakers siding with a bill that would stop the electric car company from selling its vehicles directly to consumers. indiana voted to send the bill to a summer study session, summer school, tabling it. tesla accused gm of being the driving force behind the new legislation. they are facing off to bring lower-priced electric market -- vehicles to market soon. causing concern for big oil. unsubsidized electric cars will price match gas-powered cars in as little as six years. the question -- how much oil demand will be affected by this disruption and put it change the rules around selling oil -- and could it change the rules around selling oil. we have so many automakers already making it a lot of -- making electronic vehicles. we talk about gm. nissan, ford -- selling electronic vehicles and making them cheaper and cheaper.

electric vehicles reach mass-market production. if you look out for the next six years, the component prices of the electric vehicles -- the battery makes up about 1/3 of the cost of the car. as battery packs continue to fall, we think by 2022 electric vehicles will be cost competitive with their internal combustion counterparts, and that's when you start to see growth really take off. exponential growth.

cory: why are battery prices coming down so much? tom: because electric vehicles are already starting to be adopted. the model s is a very expensive car, but it is competing with ferraris and bugattis. cory: they lose money on every single one, and that's not a sustainable business model. tom: they are losing money because they are investing in the model 3. they will unveil it next month. cory: those costs are capitalized mostly. what about the surge of lithium? isn't there a headwind that there isn't a ton of lithium, and we might not end up with entire electric vehicle fleets in the world? tom: we did a deep dive into all the elements of the battery -- components of the battery. they will only require about 1% of the world's reserves, less than 1% of the world's reserves by the year 2040, so those are

not concerns. cory: as we look out to the future, do you think it is going to have an effect on the exxon mobil and the chevron's of the world? tom: i can tell you that they don't think it will have an effect. what we wanted to do was look at it and say, how quickly could electric vehicles be adopted and how quickly could that start to affect oil demand? if you look at -- when a new technology is adopted, take iphone. once the iphone became relatively price competitive with other phones and was a superior product, demands have shifted overnight. it suddenly becomes not even a question that you are going to buy a flip phone, for example. when are we going to reach that point with the electric car?

right now, electric vehicles are growing at about 60% annual growth rate, and that's an interesting number. that's the same annual growth rate that took fourth -- ford to become the mass-market vehicle in the early-1900's. it's also what tesla is forecasting for its own sales through 2020. you put an annual growth rate of 60% going forward, you end up getting an oil displacement of about 2 million barrels per year as early as 2023. that's 2 million barrels per day of demand. cory: the one thing we know about tesla forecasts is tesla does not hit its forecasts. we are going to watch. fantastic report. we appreciate it. it looks like -- take a look at the future of the vr and sports. you are looking at it. ice bags, case matches, virtual -- page matches, -- cage matches, virtual reality. coming up next.

♪

if you are like me, you have often wondered what it would be like to go head-to-head with some of the biggest fighters in mma. belichick or -- bellator is the latest to set its sights on vr. you are a former mma fighter, right? >> check out my guns. cory: sun's out, guns out. talk about this sport as it relates to vr. >> bellator mma is one of the first mma leagues to take this approach. does it make sense for us to live screen -- stream the actual fight in vr? no. because traditional tv already

does that. they want to take fans were tv cannot take you, in the pre-fight, the post five, -- post-fight, the walk-out. it's one man or woman against another in a cage. they are prepping to get beaten to a pulp. there is a lot of intensity in rituals and trainings that goes in. cory: did you try this out? selina: i tried it out before the fight. pregame. it was definitely disorienting. it is rudimentary. you can see some of the pixelation. it left me wanting a bit more. when i took off the headset, i was weirded out. you really do feel like you are in your own world, watching these fighters go about their day. cory: i would think this sport is perfect for vr. it would be even better than watching it on tv. selina: i think it really depends.

live tv coverage of sports is heavily produced. we have spent decades perfecting this. all of the best angles, the best shots. if you've ever tried vr, you get control of what you are seeing, but you are not directed where to look. you could be looking at some fan behind you eating popcorn and you might miss the winning punch for winning shot. -- winning punch or winning shot. cory: if i'm in the ring with ronda rousey, i don't want to look at somebody watching -- eating popcorn. how do they get paid? selina: they are hoping to get some of the cord cutters. another is sponsorship and add opportunities. we can imagine a future where you will be able to interact with whatever products they are selling. that is a huge opportunity. going forward, they will see more and more creative ways to

use this to get the big bucks. cory: i will see you in the cage soon, i hope. while we wrap up the hour, a quick recap of our top stories. apple throwing down the gauntlet, its first formal opposition to the law enforcement officials trying to get them to hack into an iphone, even as protesters show they are on apple's side. the world's most valuable company taking on the united states government. tomorrow, all the latest details as it happens. that does it for this edition of "bloomberg west" from san francisco. we will see you tomorrow. ♪

>> this program is a paid advertisement by the u.s. money , a company not affiliated with the u.s. government or the u.s. mint. the markets for coins and bullion are unregulated. prices can rise or fall, so buying these items carries some risks. past performance of a coin or the market cannot predict future performance, and offers are void where prohibited. the views and opinions expressed on this program do not reflect those of this station, management, or their ownership. the information in this program